How to File Bankruptcy in Louisiana
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Bankruptcy is not for everyone or every situation. Bankruptcy can be of great help for some but can cause great losses for others. Since some loans require that a house be used for collateral, Chapter Seven bankruptcy can result in the loss of that home.
So how does this work? The state of Louisiana allows certain exemptions when filing for Chapter Seven bankruptcy and can include a home exemption. But if a home equity is more than is allowed to be protected by a Louisiana home exemption, the home can possibly be lost. In this circumstance Chapter Thirteen bankruptcy is usually the best choice as a payment plan can be created to make the necessary payments.
Chapter Seven Bankruptcy
Louisiana has two different kinds of bankruptcy: Chapter Seven and Chapter Thirteen. Chapter Seven bankruptcy is a restart to an individual’s credit and clears a majority of credit problems. Under this kind of bankruptcy, a trustee will collect the necessary assets and will sell all the property that has been deemed not exempt.
Once the assets have been sold, the money will be used to pay the pending debts. The trustee will also take a commission from the valued assets for distributing the property.
Under Chapter Seven bankruptcy certain kinds of debt cannot be eliminated, including child support, alimony, certain taxes, fraudulent debts, certain charged items, and student loans. The kinds of debts that are filed under Chapter Seven bankruptcy include those for unsecured bills and credit card debts. Chapter Seven bankruptcy can be filed by an sole individual or through a husband and wife together.
Exempt Property
Certain types of property can be exempt from being sold and be protected from creditors when Louisiana bankruptcy is filed. Louisiana has set up different categories for these exemptions and how much their values are. However even as some debts can be erased through bankruptcy, not all debts can be eliminated. These are called non-dischargeable debts.
Exemption limitations apply towards any equity of property that an individual may have. Equities may be exempt if the property has been secured through a loan and all payments are currently being paid in a timely manner. The property, such as a house or a car, may be kept if payments have been elected for continued payment. In order to keep non-exempt an individual will need to repay the property’s value.
Chapter Thirteen Bankruptcy
Chapter Thirteen bankruptcy allows individuals the opportunity to become debt-free between three and five years. Rather than sell property to pay off creditors like in Chapter Seven bankruptcy, a payment plan is proposed for a specified time limit. Minimum payments will be designated for each month so that the debt can be eliminated in less than five years.
Chapter Thirteen bankruptcy can help individuals repay missed mortgage or car payments, keep their homes by avoiding foreclosure, pay taxes, keep non-exempt properties, and halt interest debt. The amount that is paid each month depends on the overall income and specific factors of each household.